External Sector Statistics

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According to Bank of Russia’s preliminary estimate, the surplus in the
current account of the balance of payments of the Russian Federation in the
January-February 2018 period has amounted to $20.8 billion against $14.5 billion
in the January-February 2017 period. The decisive factor has been a substantial
strengthening of the trade balance under the influence of continuing for the
second year in a row growth of exports which has outpaced imports’ recovery. The
surplus in the external merchandise trade balance has grown on the
January-February 2017 period by $7.4 billion reaching $29.6 billion while the
combined deficit under other current account components has widened
insignificantly.

Net private capital outflows in the January-February 2018 period, according
to Bank of Russia’s estimate, have reached $9.8 billion (against $4.4 billion in
the January-February 2017 period), mostly, due to the buildup of foreign assets
of other sectors. The country’s international reserves gained $23.7 billion in
January-February 2018 comparing with January-February 2017, when they grew by
$15.4 billion.

According to Bank of Russia’s data, the surplus in the current account of the
balance of payments of the Russian Federation has reached $22.4 billion in the
January-September 2017 period against $15.3 billion in the respective 9 months
of 2016. It was stipulated by the growing surplus in the trade balance
benefiting from favorable external market conditions for Russia’s main export
commodities. Net private capital outflows have amounted to $16.5 billion against
$10.0 billion in the corresponding preceding year’s period. Banks have been net
capital exporters while continuing to extinguish their liabilities to
nonresidents, whereas transactions of Other sectors have been balanced overall.

External debt of the Russian Federation as of September 30, 2017 has reached
$536.7 billion, gaining $22.5 billion from the beginning of the year. Debt of
General Government has grown by $15.1 billion, primarily, as a result of
increasing liabilities to nonresidents under sovereign debt securities. Unlike
the situation a year ago, there also has been a noticeable growth (by $9.4
billion) in the external debt of Other sectors, resulting, inter alia, from
attracting financing from international markets through corporate Eurobonds.

Net International Investment Position of the Russian Federation has increased
over the 9 months of 2017 from $222.1 billion to $271.0 billion due to the
outpacing growth of foreign assets vis-à-vis foreign liabilities.

The external debt of Russian Federation as of the 1st of January 2018,
according to the Bank of Russia’s estimates, amounted to $529.1 billion. In
comparison with the beginning of the previous year it has increased by $15.0
billion (2.9%). The growth of the external debt was due to the acquisition by
foreign investors of sovereign debt securities denominated in Russian rubles,
and attraction by Russian companies of debt financing from foreign affiliates.
In contrast, the external debt of banks decreased to the lowest level in the
last decade.

According to macroeconomic statistics, external debt payments of
non-financial organisations, including principal and interest, will total $28.7
and $15.3 billion in 2018 Q1 and Q2 respectively.

According to updated information, in 2018 Q1, external debt payments mainly
consist of intragroup payments ($11.8 billion or 41% of scheduled payments,
according to macrostatistics) of Russian companies – top borrowers in the
external market. These payments are most likely to be carried over and are
highly unlikely to exert pressure on borrowers’ liquidity position.

Overall, actual payments may reach $16.8 billion in 2018 Q1 and $14.2 billion
in 2018 Q2. The balance is represented by intragroup payments calculated for the
top 30 Russian corporate borrowers in the external market.

The Bank of Russia’s survey of 30 top companies suggests that in 2018 the
proportion of intragroup borrowings in the total payments on external debts by
large borrowers is as follows: 94% in January, 12% in February, 1% in March, 5%
in April, 1% in May and 35% in June. As adjusted for intragroup funding, the
payments of top companies will total $8.1 billion in 2018 Q1, or by 18% less
year on year, and $9.2 billion in 2018 Q2, or by 50% more year on year, mainly
due to significant scheduled payments in April. In April, more than $5 billion
will be spent by several large non-financial organisations with sufficient
foreign currency liquidity to pay off their Eurobonds.

According
to statistical data, in 2017 Q4 and 2018 Q1, total external debt payments of
non-financial institutions, including principal and interest, will total $25
and $28.6 billion respectively.

According
to macroeconomic statistics, a considerable amount of payments are
traditionally made in December ($15 billion); however, in practice, the
majority of such payments are usually carried over or restructured.
Additionally, a comparable volume of payments ($16 billion) falls on
January 2018. However, the Bank of Russia estimates that this amount
predominately consists of intragroup payments of the largest Russian corporate
borrowers in the external market, totalling more than $11 billion or roughly
70% of scheduled payments, according to macroeconomic statistics. These
payments are most likely to be carried over and are highly unlikely to exert
pressure on borrowers’ liquidity position.

The
amount of net payments due (exclusive of intragroup payments) may total up to
$23.5 billion in 2017 Q4 and $15.9 billion in 2018 Q1. The balance is
represented by intragroup payments calculated for the top 30 Russian corporate
borrowers in the external market.

The
Bank of Russia’s survey of the largest companies suggests that the percentage
shares of intragroup loans in the total external debt payments by large
borrowers are as follows: 4% in October, 26% in November, 26% in December 2017;
94% in January, 28% in February and 2% in March 2018. As adjusted for
intragroup funding, payments due by the largest companies will be 13 and 18%
lower in 2017 Q4 and 2018 Q1 than in comparable periods in 2016 and 2017.

According
to statistical data, total external debt payments of non-financial
institutions, including principal and interest, will in Q3 and Q4 total $16 billion
and $25 billion respectively.

Once
intragroup payments* are deducted, which are very likely to be extended or
refinanced, net payments in the quarters under study will total $12 billion and
$23.6 billion respectively, essentially consistent with the same periods of
previous years. Macrostatistics show that a fourth quarter (mainly December) is
traditionally the time of the bulk of repayments, and experience suggests that
a substantial proportion of these will be extended.

According
to a BoR survey of major companies, the share of intragroup loans in total
repayments of major borrowers is estimated at 46% for July, 16% for August, 60%
for September, 0.2% for October, 29% for November and 26% for December 2017.
Adjusted for intragroup funding, major corporations’ payments in 2017 Q3-4 are
predicted to be fairly even and average about $1.5 billion a month, which is a
third less than in the same period last year.

The macroeconomic statistics suggest
that total external debt repayments of non-financial organisations in 2017 Q1
and 2017 Q2, including the principal and interest, stand at $20.2 billion and
$17.2 billion, respectively.

The updated data suggest that considerable
payment volume in 2017 Q1 (including $12.8 billion in March) is formed by
liabilities of top-30 Russian borrowers in the foreign market, of which roughly
$4.4 billion are intragroup payments and $3.8 billion are scheduled eurobond redemptions
by large companies holding sufficient amount of FX liquidity.

Actual debt repayments may total
up to $15.2 billion in 2017 Q1 and $13.8 billion in 2017 Q2.
The residual amount falls on intragroup payments (as determined
for top-30 Russian borrowers in the foreign market), which are usually very
likely to be prolonged and refinanced.

The Bank of Russia’s survey
among major companies showed that intragroup loans account for the following
share of total external debt repayments of large borrowers in the first half of
2017: 24% in January, 14% in February, 38% in March, 32% in April, 28% in
May, and 42% in June. Debt repayments of major companies will total $9.8
billion in 2017 Q1 and $6.1 billion in 2017 Q2, adjusted for intragroup
financing.

According to macroeconomic statistics,
in 2016 Q4 – 2017 Q1, the amount of external debt repayments by non-financial
organisations, including principal and interest, totals $23 billion and
$20.7 billion respectively.

As it is the case, the peak of
repayments occurs in December according to macroeconomic statistics
($13.4 billion), with the bigger portion of these repayments likely to be
rolled over. This December, the amount of repayments is scheduled to be down by
24% year on year.

Additionally, the schedule for
the period under consideration shows that considerable external debt repayments
are due in March 2017 ($12.8 billion). According to Bank of Russia
estimates, the main portion of these payments is made up of the liabilities of
30 Russian companies – largest borrowers in external markets. Out of this
amount, roughly $4.8 billion represent intragroup payments, and
$3.8 billion – scheduled Eurobond repayments by several large
non-financial organisations which have sufficient foreign currency liquidity to
service their debt obligations.

Overall, actual payments may
reach $21.6 billion in 2016 Q4 and $15.2 billion in 2017 Q1. The rest
of this amount represents intragroup payments (these are established for 30
Russian companies – largest borrowers in external markets), which, as a rule,
are likely to be rolled over and restructured.

According to the Bank of Russia’s
survey of top companies, the share of intragroup borrowings in the total amount
of external debt repayments by large borrowers had the following readings
across 2016: 0.2% in October, 17% in November, 29% in December; and across
2017: 24% in January, 23% in February, and 40% in March. As adjusted by
intragroup funding, the repayments by the largest companies will total
$6.3 billion in 2016 Q4 and $9.8 billion in 2017 Q1.

The
statistical reading of the total external debt repayments (principal and
interest) stands at $17.8 billion in 2016 Q3 and $22.4 billion in 2016 Q4. The
Bank of Russia estimates however the actual repayments to total up to $11
billion in 2016 Q3 and $ 21.5 billion in 2016 Q4.

The
difference owes its origin to intra-group payments (calculated for 30 Russian
top corporate borrowers in the external market), which are very likely to be
rolled over and refinanced.

The
Bank of Russia-conducted survey of major Russian companies shows that the share
of intra-group loans in the total repayments will equal to 25% in July, 3% in
August, 70% in September, 0,2% in October, 14% in November and 17% in December
2016.

Adjusted
for intra-group financing, major corporate borrowers are projected to enjoy fairly
even debt repayments in Q3–Q4, to a total of approximately $2.3 billion a
month.

* Q3
readings are adjusted for updated data based on transaction report forms issued
by the authorised banks as part of the procedure for implementing forex
transactions between residents and non-residents

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